BusinessDay

E-commerce has brought value to parts of Nigeria less served by retail – Jumia CEO

Jumia Nigeria recently celebrated 10 years of operating in the country. MASSIMILIANO SPALAZZI, the company’s CEO, in this interview, speaks about the journey towards helping to build the e-commerce ecosystem in Nigeria today. BUNMI BAILEY brings the excerpts.

How will you describe e-commerce growth in Nigeria and Africa since Jumia’s 2012 launch, 10 years ago in Nigeria?

I will describe Jumia’s growth as exponential. Since we launched in 2012, we’ve been seeing the growth of e-commerce and digitalization both in Nigeria and in other countries we operate in, continuing to grow. This growth has happened across many segments and many categories of many services that Jumia has been working in and that e-commerce covers.

At the beginning, it was about educating the market and getting people to be aware that e-commerce is a thing in the country and there were reliable players ready to build trust in the customers, for vendors to use the platform and deliver to customers in effective ways for everyone. Since 2012, we grew in volume, in the services we offered, and introduced on demand i.e. Jumia Food, then JumiaPay, Advertising, and Logistics services for clients. This is what made the company we are today. In 2012, we launched and less than 10 years later, we were listed on the New York Stock Exchange as the first African Internet Company (Unicorn) to be listed there.

Jumia directly employs more than 1,000 people and many more through the sellers and logistics partners. Through its activities, Jumia allows local sellers to gain exposure to their markets and thus encourages them to hire more staff to support their production and distribution activities.

Broadband penetration in Nigeria is picking up gradually at 43 percent, which is a key factor in your kind of business. How has the penetration affected patronage of Jumia ecommerce business in Nigeria?

The broadband penetration is playing an important role which has shown Nigeria growing very fast compared to the early years when we started the company. I believe broadband penetration is speeding up the digitalization of the population in the country. Today we know that about 50 percent of the population of Nigerians use the internet.

These numbers are growing every month and the internet is no longer a mystery to people, it’s getting part of day-to-day activities. This part is something that helped us a lot to grow. I think e-commerce can bring value to certain areas of the country that are less served by retail. Typically, if you think about the rural areas where people can’t access goods as if they were in the big cities and have it delivered at convenient shipping prices all the way to where they live. For other areas where you have a lack of offer, e-commerce can bring that offer into place. Broadband combined with digitalization and opportunity from a retail standpoint is proving a significant opportunity for growth in the e-commerce space.

What have been your greatest challenges doing e-commerce business in Nigeria, and what are the possible solutions?

The key problem that we saw in the beginning was building trust and the adoption of e-commerce. The trust was to be built between customers and the vendors, the logistics players, and all the stakeholders that were working with us.

We had to explain to the vendors that when an order was placed, they had to release their goods without getting paid at the beginning because payment would have been done as cash on delivery by the customer and the customer also had to trust the platform to place the order, to see the product and then pay. There was a lot of trust to be built together with the logistics company that had to be involved in this new way of doing business which is a big opportunity. After that, logistics became a problem because the more we were growing and delivering across the cities, the more we needed a backbone of infrastructural logistics that was strong enough to deliver all the packages to all the many customers we had across the country.

Another challenge was internet penetration and payments. We had given the opportunity initially to use cash on delivery for people to make their purchases comfortably and then to offer an easy way to pay digitally through JumiaPay, which is another service we launched not long after we launched our first company in 2012. The growth of e-commerce, led by Jumia and some other smaller players and other segments of the economy online, brought the need of having many more types of transportation including vans, trucks, bikes, etc. There was a need for entrepreneurs to invest, to see the opportunity to grow with e-commerce. Overall, it built more than a company, it built an ecosystem and it brought part of the economy online.

Read also: Nigerian consumer firms struggling to sustain cashflow amid headwinds

Broadband combined with digitalization and opportunity from a retail standpoint is providing a significant opportunity for growth in the e-commerce space

What are your biggest gains in 10 years of operating in Nigeria, and what are your plans for the next 10 years?

The fact that we have been operating for ten years, in a market like Nigeria, is something that we are very happy and proud of, and we thank Nigerians who helped to make Jumia possible. Over the years we have reached many milestones. We opened the marketplace and introduced JumiaPay, Jumia Food, and all the other businesses. We further expanded our operations in many countries across Africa and then, we launched the Jumia logistics for external clients.

Also, we introduced Jumia Advertising, which was another business that we launched to satisfy the needs of all the brands who wanted to be associated with the Jumia brand and advertise their goods online. Recently, we launched the Jumia Food Mart to help customers buy their groceries and essentials and get them delivered in under 20 minutes. Finally, one of our biggest gains was during the COVID period when we were enabled and allowed to play an important role in the economy to support those people who were going through lockdowns and curfews and difficult times to access goods at the best price possible.

Our next plan is to continue to grow the business of Jumia by serving as many customers as we can because we believe that we are still at the start despite being here for ten years. We believe there are many more customers that we can serve at our best and with more services which we aim to do in a smart, efficient, speedy, and time-effective way to make Jumia become the number one destination for online shopping for all Nigerians. We launched free delivery in Lagos, Abuja and Ibadan to enable consumers to shop more for their daily essentials while also pushing our quick commerce platform dubbed Jumia Food Mart to enable consumers to receive their online grocery orders in a record time of under 20 minutes.

As Jumia continues to grow, we are conscious of the environmental impact of our operations and continuously seek ways to minimise our impact. In 2021, we sold 8,472 refurbished phones through our Marketplace thereby promoting responsible consumption and encouraging our customers to select more sustainable alternatives. By identifying practices that are better for the environment, we are also finding opportunities that are better for our business.

Jumia must have had some specific targets at the beginning of its e-commerce business in Nigeria. Ten years down the line, will you say your target has been achieved?

Targets are ambitions that you give yourself. At Jumia, we are happy and proud to be where we are today. We’re very humble but at the same time we are very conscious of what we’ve built and happy to know that as we stand today, we are serving millions of customers and hundreds of thousands of vendors across Africa to do better business. On this, we are very proud, and we are equally proud to have given the opportunity to logistics companies to grow with us and to serve the needs of customers and vendors in the best way.

We think these targets have to always be raised to the next level, we never sit, and we always keep looking at the future thinking of ways to satisfy the needs of our customers, and vendors at best to keep on growing in the e-commerce space which is growing very fast in this market.

As technology evolves, consumers’ tastes and demands are also evolving by the day. How has Jumia addressed consumers’ needs in the last ten years?

We use technology as a backbone for growth and for experience, and in the last ten years, our platforms have been evolving by the day. We have roadmaps that have deadlines as close to one week to constantly update the user experience, the front-facing, the back-facing, the systems, and the infrastructure in order to always satisfy the needs of our customers at best.

The customer needs have changed, particularly in the past two years. Since COVID and the current situation of the economy with a decreasing purchasing power due to the rising inflation, rising cost and prices, and devaluation of the naira, what we are seeing is consumers are shifting more to wanting to find on Jumia daily essentials and get the best prices, the largest varieties and assortment easily delivered to their homes.

I think this is going to stay for a while, as consumers constantly come online and shop for their groceries and other essentials at convenience. All we can do at Jumia is to offer that variety of goods that they want at the best price.

How have government policies impacted your business?

I think that the government has been supportive in doing the best for what companies like us are doing. In general, we would want to see the government and regulators being on the same side as the private sector and interestingly, e-commerce attracts a good interest from those kinds of parties.

For example, in Nigeria, we have an e-commerce group under the Lagos Chamber of Commerce where our Chief Sustainability Officer, Juliet Annamah, who was previously the CEO of Jumia Nigeria is the first Chairwoman of the council. There are initiatives that are working, which make us feel that there is the right level of conversation between the government and the private players in the e-commerce sector. We have seen some efforts by the government, for example, the National Economy Digital Policy and Strategy for Digital Nigeria developed by the Ministry of Communication which has eight pillars covering all aspects of solid and soft infrastructure as well as regulations.

I think more can be done especially on ensuring that there is an effort to make this side of the economy grow faster. It is important to consider the enablers and the key initiatives that can help growth happen faster than what is happening today, because eventually, it is beneficial for everyone. Digitalization brings opportunities, employment, growth, and most of it is passing through e-commerce. So, e-commerce is key to the rebirth and the growth of the economy.

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